Pacific trade pact calls for tough Japan reforms

Farmer protesters rally against the Trans-Pacific Partnership (TPP) in front of the Diet building in Tokyo Friday, March 15, 2013. Prime Minister Shinzo Abe is set to announce Japan will join talks on the trade pact that would oblige the country to undertake major reforms, especially in farming. The expected announcement later Friday confirming plans to seek participation in the U.S.-led TPP, is raising protests from farmers opposed to opening protected home markets to foreign competition. (AP P
— AP

Farmer protesters rally against the Trans-Pacific Partnership (TPP) in front of the Diet building in Tokyo Friday, March 15, 2013. Prime Minister Shinzo Abe is set to announce Japan will join talks on the trade pact that would oblige the country to undertake major reforms, especially in farming. The expected announcement later Friday confirming plans to seek participation in the U.S.-led TPP, is raising protests from farmers opposed to opening protected home markets to foreign competition. (AP P
/ AP

Farmer protesters rally against the Trans-Pacific Partnership (TPP) in front of the Diet building in Tokyo Friday, March 15, 2013 with a banner reading: "We absolutely oppose Japan's participation to TPP." Prime Minister Shinzo Abe is set to announce Japan will join talks on the trade pact that would oblige the country to undertake major reforms, especially in farming. The expected announcement later Friday confirming plans to seek participation in the U.S.-led TPP, is raising protests from farm— AP

Farmer protesters rally against the Trans-Pacific Partnership (TPP) in front of the Diet building in Tokyo Friday, March 15, 2013 with a banner reading: "We absolutely oppose Japan's participation to TPP." Prime Minister Shinzo Abe is set to announce Japan will join talks on the trade pact that would oblige the country to undertake major reforms, especially in farming. The expected announcement later Friday confirming plans to seek participation in the U.S.-led TPP, is raising protests from farm
/ AP

TOKYO 
Prime Minister Shinzo Abe announced Friday that Japan will join talks on a Pacific trade pact that would oblige the country to open up sheltered industries including farming, long a bastion of protectionism.

The decision to seek participation in the U.S.-led Trans-Pacific Partnership, or TPP, is raising protests from farmers opposed to opening home markets to foreign competition. While rural voters are a traditional bastion of support for Abe's Liberal Democratic Party, many in Japan see the pact as a way to overcome stubborn resistance to reforms essential for reviving the stagnant economy.

Japan has no choice but to opt for the growth that comes with freer trade or lose out to other countries that are capitalizing on such market opening, Abe said in a national address.

"Japan has run into a big wall - low birthrate, aging and lingering deflation - and we have turned inward looking," he said. "If Japan becomes the only one that turns inward, there is no chance for our growth. No businesses would want to invest in such a country and talented people would not be interested."

Abe repeatedly pledged to guard Japan's national interest and ensure that the trade pact would benefit farmers as well as other Japanese.

"What we really should fear is doing nothing," Abe said. "I promise you that we will guard our sovereignty as we pursue our national benefit through these negotiations."

The decision dovetails with his "Abenomics" economic strategy, which is based on easing monetary policy, boosting public spending and longer-term reforms.

"TPP is a core issue for Japan right now. The main thing is that Abenomics, the plan of getting Japan moving and growing again, does not only depend on printing more money or on fiscal spending, but really depends on liberalizing the economy," said Martin Schulz, an economist at Fujitsu Research Institute in Tokyo.

"For that, TPP is a core part because it involves all sectors, from energy, to agriculture, insurances, the car industry as well. That would be a big step for Japan," Schulz said.

Japan's agricultural lobby is small but politically powerful. However, after two decades of stagnation, calls by big business groups such as the Keidanren to join the trade pact or miss out on easier access to key export markets appear to have outweighed objections from farmers.

News reports Friday said the government estimates that joining the Pacific trade agreement would boost Japan's GDP by as much as 3 trillion yen ($31 billion) a year, equal to about 0.7 percent of GDP in the first year.

With Japan's participation, the free trade zone "would cover basically 40 percent of (world) GDP. It would be a very, very big area and it would have a significant impact," Schulz said.

Abe held back from committing to the trade pact until his recent visit to the U.S., where after meeting with President Barack Obama the two leaders issued a statement appearing to offer some wiggle room for Abe on thorny issues such as heavy protections for Japan's rice farmers.